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October 29, 2013

TD Ameritrade Posts Healthy Profits, Revenue in Q4 and FY 2013

Average size of new clients at TDAI is growing, says CEO Tomczyk; 389 breakaway brokers joined custody unit in fiscal year

CEO Fred Tomczyk of TD Ameritrade.

TD Ameritrade Holdings (AMTD) announced Tuesday net income of $675 million, or $1.22 per diluted share, on record net revenues of $2.76 billion for its fiscal year ended Sept. 30, 2013. In its fiscal fourth quarter, TD Ameritrade had net income of $200 million, or $0.36 per diluted share, on revenues of $709 million. Both earnings numbers beat analysts’ consensus estimates slightly.

In an interview with ThinkAdvisor, CEO Fred Tomczyk said “we’re very happy” with the results, noting that it was the fifth straight year that the company had achieved double-digit net new client asset growth; this year posting 10% growth in net client assets of about $50 billion. He also expressed satisfaction that “expenses haven’t grown in three years,” and that at TD Ameritrade Institutional, “we continue to increase the size of our clients.” He said that the “combination of $50 billion in net new assets and strong expense controls” proves that “our management team has done a good job.”

Additionally, Tomczyk noted that the company increased its annual dividend 33% and instituted a special $0.50 dividend. “We’ve returned over 100% of our earnings to shareholders,” he declared.

While TD does not break out separate results for its retail and advisor units, in his discussion with analysts about the earnings report this morning, Tomczyk pointed out that TDAI had added 389 breakaway brokers to its RIA custody business, which “enjoyed strong growth driven by new and existing RIAs.” He further said that its pipeline of prospective new advisor clients was “robust.”

Speaking of the overall market and economy and a recent downturn in consumer confidence, Tomczyk said that “gridlock in Washington is affecting consumers’ psychology,” but if “we just got rid of the uncertainty in Washington” the government could increase its revenue by “geting the economy going.” However, he said that “this kind of market plays into the hands of RIAs.”